Singapore told to look to domestic market for growth 

Singaporean growth this year is expected to come in slightly below the midpoint of the 1.5 to 3.5 per cent forecast range without any severe external setbacks, according to the Monetary Authority of Singapore (MAS) in its twice-yearly review.

That would mark a fall from the 3.2-per-cent growth in GDP recorded last year.

The MAS blamed the slower Singaporean growth on the weakening in its key trading partners: China, the five largest Asean economies, the eurozone and the US, accounting for about 30 per cent of Singapore’s GDP.

“Modern services will be the key driver of growth, as digitalisation and innovation-driven activities continue apace,” said the MAS review.

“Meanwhile, domestic-oriented sectors such as construction and consumer-facing services are expected to stay on a recovery path.”

The outlook for the rest of 2019 was clouded by global economic uncertainty, the macroeconomic review said.

It estimated global growth would slow to 3.9 per cent this year, after 4.3 per cent in 2018. 

“Broadly, the subdued prospects for global growth will weigh on the externally oriented segments in Singapore,” the central bank report said.

“Further, the global electronics sector faces significant headwinds owing to market oversupply, exacerbated by the softening of demand due to the uncertain business environment.”

It singled out trade-related electronics production and modern services like financial intermediation as key to growth for the rest of 2019.

Pockets of weakness also emerged in the modern services cluster, which included financial and technology services such as in banking and cybersecurity.

The MAS told firms to look towards domestic factors within the tiny city-state for growth this year, pointing to the expansion in services arising from Singapore’s digital transformation.

The central bank said Singapore’s construction sector grew by 1.4 per cent in the first quarter of 2019, its first expansion in 10 quarters.

This positive push is expected to continue for the rest of 2019, given a recovery in contracts awarded since the second half of 2017, with industrial projects such as JTC’s 

development in the Punggol Digital District (pictured) providing growth.

“Activities of payment services players should continue to pick up as Singapore progresses towards a more cashless society. Competition, improved product offerings amongst incumbents, and entry of newer players will drive the momentum of this segment,” the MAS said.

ICT and business services would benefit from the push towards a creating a “smart nation”, the central bank forecast. 

Public investment in digitalisation under the “Digital Government Blueprint” would boost the tech sector, the report added.


Punggol under construction. Picture credit: Wikimedia